The Corporate Transparency Act (“CTA”) took effect on January 1, 2024. Under this federal law, entities registered to do business in the United States are required to file Beneficial Ownership Information (“BOI”) Reports with FinCEN, a part of the Treasury Department. These BOI Reports identify each individual who owns more than twenty-five percent of the ownership interest in the company, as well as each individual who can exert substantial control over the company. Newly registered or formed companies must file their initial BOI Report within 90 days of their registration, while companies registered on or before December 31, 2023, are required to file their initial BOI Report by December 31, 2024. Companies and owners who fail to file required reports under the CTA face substantial penalties, including monetary fines.
On Friday, March 1, 2024, a court in the Northern District of Alabama ruled the CTA to be unconstitutional (National Small Business United v. Yellen, No. 5:22-cv-01448 (N.D. Ala.)) and entered an injunction against FinCEN enforcing the CTA against the plaintiffs in that particular case, which include all members of the National Small Business Association (a small business advocacy organization). Several other cases that make similar arguments are pending in federal court, including one in the Northern District of Ohio,
At this time, unless your company was a member of the National Small Business Association on March 1, 2024, your company must still comply with the CTA. Newly formed entities must file their initial Report no later than 90 days after registration with the Secretary of State or similar government agency. Pre-existing companies can delay their filings until later this year.
PS&E attorneys are monitoring the various pending federal cases and FinCEN’s announcements regarding their enforcement of the CTA. If you have any questions or want additional information about the CTA or its status, contact one of the PSE Corporate and Business Attorneys at 937.223.1130 or pse@pselaw.com.
